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CIT Bondholders Agree To $3 Billion Emergency Loan

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CIT Bondholders Agree To $3 Billion Emergency Loan

Business

CIT Bondholders Agree To $3 Billion Emergency Loan

CIT Bondholders Agree To $3 Billion Emergency Loan

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CIT, a big lender to small and mid-size businesses around the country, was headed for bankruptcy, but its bondholders reportedly agreed Sunday to give it a $3 billion emergency loan. The government had refused to bail out the financial firm. The loan buys CIT some time but doesn't solve its problems.

STEVE INSKEEP, host:

NPR's business news starts with a financial rescue.

(Soundbite of music)

INSKEEP: This time the U.S. government is not involved. In fact, the government refused to bail out CIT. That's the financial firm that's a big lender to small and medium-sized businesses. CIT was headed for bankruptcy. But last night its bondholders reportedly agreed to give the a three billion dollar emergency loan. The loan comes with a hefty interest rate of 10-and-a-half percent. Not a bad deal for the bondholders, assuming CIT manages to pay it back. And while the loan buys CIT some time, it does not solve the company's problems. It still has to restructure its business and dig itself out from under all the subprime mortgage loans and other risky investments it made during the housing boom.

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